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Carriage fee fight is on the air

Canada's three biggest broadcasters – CTV, Global and CBC – have temporarily set aside their competitive rivalry and joined forces to launch a national campaign designed to win over public opinion in their ongoing fight to collect fees from cable and satellite companies.

By Rita TrichurBusiness Reporter

Mon., Sept. 14, 2009

Canada's three biggest broadcasters – CTV, Global and CBC – have temporarily set aside their competitive rivalry and joined forces to launch a national campaign designed to win over public opinion in their ongoing fight to collect fees from cable and satellite companies.

Calling it "Local TV Matters," the conventional broadcasting giants are kicking off a massive multi-media advertising blitz today that includes website localtvmatters.ca, along with TV, radio and print advertisements.

Their campaign centres on a proposal called fee for carriage.

That idea, already twice rejected by the Canadian Radio-television and Telecommunications Commission, would require cable and satellite companies to pay over-the-air broadcasters a fee to carry their signals. CRTC will reconsider the idea for a third time at public hearings in November.

The broadcasters say carriage fees are a "matter of fairness," arguing the business model for over-the-air television is "broken."

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Cable and satellite companies, however, liken the proposal to a bailout for broadcasters that overspent on acquisitions and U.S. programming in recent years. They warn that if adopted, those added costs would be borne by consumers.

The broadcasters' campaign is being launched about 10 days after cable giant Rogers Communications Inc. sent a strongly-worded email to customers warning them that fee-for-carriage could inflate their cable bills by up to $10 a month. Shaw Communications Inc. has also taken similar action.

Rogers vice-chairman Phil Lind estimates that more than 10,000 Canadians have already complained to the CRTC about the issue, which he deems a massive consumer backlash. "There's a lot of volatility because it is a very expensive issue for people," he said.

A CRTC spokesperson confirmed late Friday that it has received about 10,000 consumer comments and that most of them were "complaints."

The broadcasters, however, agree that ordinary Canadians should not have to absorb higher costs. Rather, the cable and satellite companies should voluntarily eat the difference, they say.

Broadcasters say they just want the ability to negotiate "fair value" for their signals, but deny they already have a price in mind. They've warned the CRTC for years the industry faces a "systematic problem," now that more viewers are migrating to specialty channels and the Internet. Earlier this year, the CRTC reported that profits at conventional TV networks tumbled by more than 90 per cent last year as revenues shrank and costs grew. The industry's profits before interest and taxes were $8 million for 2008 versus $112.9 million in 2007.

"It is not something that is going to go away in the next two years. It is a chronic issue," said Steven Guiton, the CBC's chief regulatory officer.

But Bell Canada, which owns Bell TV satellite service and a 15 per cent stake in CTVglobemedia, argues the broadcasting business is merely evolving. "Canadian broadcasters have adapted to the changes and remained financially healthy, although the source of their profits is shifting from conventional to specialty/pay," Bell said in a document last week.

CTV and CanWest each own a stable of specialty channels. Cable and satellite companies currently pay carriage fees to distribute specialty TV channels but not for conventional stations as those signals can be pulled in for free with an antenna.

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